KB Home (KBH) Stock Slides as Market Rises: Facts to Know Before You Trade

KB Home (KBH) closed at $63.06 in the latest trading session, marking a -2.76% move from the prior day. This move lagged the S&P 500's daily gain of 0.81%. Meanwhile, the Dow gained 0.63%, and the Nasdaq, a tech-heavy index, added 1.26%.

Heading into today, shares of the homebuilder had gained 12.66% over the past month, outpacing the Construction sector's gain of 8.81% and the S&P 500's loss of 0.25%.

Market participants will be closely following the financial results of KB Home in its upcoming release. On that day, KB Home is projected to report earnings of $0.53 per share, which would represent a year-over-year decline of 64.43%. At the same time, our most recent consensus estimate is projecting a revenue of $1.11 billion, reflecting a 20.57% fall from the equivalent quarter last year.

In terms of the entire fiscal year, the Zacks Consensus Estimates predict earnings of $4.19 per share and a revenue of $5.59 billion, indicating changes of -35.74% and -10.38%, respectively, from the former year.

Investors should also take note of any recent adjustments to analyst estimates for KB Home. These recent revisions tend to reflect the evolving nature of short-term business trends. Consequently, upward revisions in estimates express analysts' positivity towards the business operations and its ability to generate profits.

Our research reveals that these estimate alterations are directly linked with the stock price performance in the near future. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, spanning from #1 (Strong Buy) to #5 (Strong Sell), boasts an impressive track record of outperformance, audited externally, with #1 ranked stocks yielding an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 1.02% higher within the past month. At present, KB Home boasts a Zacks Rank of #5 (Strong Sell).

Looking at its valuation, KB Home is holding a Forward P/E ratio of 15.49. This valuation marks a premium compared to its industry average Forward P/E of 15.01.

One should further note that KBH currently holds a PEG ratio of 8.47. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. As the market closed yesterday, the Building Products - Home Builders industry was having an average PEG ratio of 2.24.

The Building Products - Home Builders industry is part of the Construction sector. This group has a Zacks Industry Rank of 241, putting it in the bottom 2% of all 250+ industries.

The strength of our individual industry groups is measured by the Zacks Industry Rank, which is calculated based on the average Zacks Rank of the individual stocks within these groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.